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HB1274
HOUSE OF REPRESENTATIVES
H.B. NO.
1274
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
A BILL FOR AN ACT
relating
to the state auditor
.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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SECTION 1.
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The legislature finds that the effective
oversight of
managed care organizations
that are under contract with the department of human services to provide
managed care health insurance plans under the state medicaid program
is
essential to ensure the proper use of public funds and the delivery of quality health
care services to medicaid beneficiaries.
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The state auditor plays a critical role in this oversight by conducting
audits to assess the performance, compliance, and financial integrity of entities
receiving state funds.
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The legislature further finds that medicaid
is a significant component of the State's budget.
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Ensuring the integrity and efficiency of
medicaid health care insurance contractors
is
crucial for the sustainability of the program.
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Given the complexity and scale of medicaid
operations, it is imperative to have a robust audit mechanism to identify and
address any issues related to financial management, service delivery, and
compliance with federal and state regulations.
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The legislature further finds that
auditing Hawaii's
medicaid health care
insurance contractors
will promote transparency; ensure medicaid funds
are used appropriately and for their intended purpose; ensure Hawaii's medicaid
beneficiaries are receiving the requisite quality of care; ensure compliance
with all applicable state and federal laws, regulations, and contractual
obligations; and improve the efficacy and effectiveness of
medicaid health care insurance contractors
,
leading to better health care outcomes for beneficiaries.
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The legislature further finds that
the Medicaid Program Integrity Manual, published by the Centers for Medicare and
Medicaid Services, outlines the importance of audits in identifying and
addressing medicaid fraud, waste, and abuse.
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The manual emphasizes the need for proactive
project development and collaboration between state agencies and auditors to
ensure program integrity.
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Additionally,
a report by the United States Government Accountability Office published on
September 21, 2023, highlights the critical role of state auditors in medicaid
oversight.
�
The report found that state
auditors identified an average of over three hundred medicaid audit findings
per year, including overpayments and payments to ineligible providers.
�
The report also noted that nearly sixty per cent
of medicaid audit findings were repeated from the prior year, indicating the
need for more effective corrective actions.
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Specific incidents in Hawaii have
highlighted the need for rigorous audits.
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For example, the department of human services
identified multiple cases of medicaid overpayments due to provider
ineligibility, noncovered services, and lack of prior authorization in 2021 and
2022.
�
These overpayments were resolved
through recoupment, tax offset, and circuit court judgments.
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Additionally, a focused program integrity
review by the Centers for Medicare and Medicaid Services in 2023 found that
Hawaii's medicaid managed care program had several areas needing improvement in
terms of fraud, waste, and abuse prevention.
�
The review identified issues such as
inadequate oversight of managed care organizations, insufficient fraud
detection and prevention measures, and lack of coordination between state
agencies and managed care organizations.
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The legislature further finds that the
focused program integrity review also highlighted that the state medicaid
program lacked effective mechanisms to detect and prevent fraud within managed
care payments.
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This included issues with
incorrect fee-for-service payments and inaccurate state payments to managed
care organizations.
�
The review
additionally found that there was a lack of coordination between state agencies
and managed care organizations, which led to inefficiencies and potential
financial losses.
�
Although a memorandum
of understanding between the department of human services and department of
health was established to improve coordination and alignment, challenges
remain.
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The legislature believes that the
findings of the 2023 Center for Medicare and Medicaid Services focused program
integrity review report necessitate a state audit to address the identified
issues and ensure the integrity and efficiency of the state medicaid program.
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The legislature further finds that the state
auditor has had legal authority since 1975 to audit
medicaid health care insurance contractors
but has never exercised
this authority, making these audits long overdue.
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Accordingly, the purpose of this Act
is to require the state auditor to conduct management and financial audits of
the State's
medicaid health care
insurance contractors
on a biennial basis.
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SECTION 2.
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Chapter 23, Hawaii Revised Statutes, is
amended by adding a new section to be appropriately designated and to read as
follows:
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"
�23-
�
Medicaid
health care insurance contractors; audit; report.
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(a)
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The auditor shall conduct at least once every
two years a management and financial audit of all medicaid health care
insurance contractors.
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The first audit
shall be conducted within six months of July 1, 2025, with the first audit
report to be submitted no later than twenty days prior to the regular session
of 2027.
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(b)
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Audits under this section shall:
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(1)
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Assess the
financial integrity, performance, and compliance with all applicable federal
and state laws, regulations, and contractual obligations of each medicaid
health care insurance contractor; and
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(2)
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Review
documents, including but not limited to any books, records, or other evidence,
related to the financial and operational activities of each medicaid health care
insurance contractor.
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(c)
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All medicaid health care insurance contractors shall cooperate with and
assist the auditor as needed in conducting the audit, including promptly
providing all records, documents, and any other information requested by the
auditor in the course of the audit.
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(d)
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The auditor shall submit a report of its findings and recommendations to
the governor, legislature, and director of human services no later than twenty
days prior to the convening of the regular session following the year in which
the audit is conducted.
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(e)
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The auditor may conduct additional audits as
deemed necessary based on risk assessments or at the request of the governor,
legislature, or director of human services.
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(f)
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As
used in this section,
"medicaid health care
insurance contractors" means managed care organizations that are under
contract with the department of human services to provide managed care health
insurance plans under the state medicaid program.
"
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SECTION 3.
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There is appropriated out of the general
revenues of the State of Hawaii the sum of $
or so much thereof as may be necessary for fiscal year 2025-2026 and the same
sum or so much thereof as may be necessary for fiscal year 2026-2027 to conduct
management and financial audits of medicaid health care insurance contractors
as required by this Act.
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The sums
appropriated shall be expended by the office of the state auditor
for the purposes of this Act.
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SECTION 4.
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New statutory material is underscored.
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SECTION 5.
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This Act shall take effect on July 1, 2025.
INTRODUCED BY:
_____________________________
Report Title:
Medicaid;
Managed Care Organizations; Medicaid Health Care Insurance Contracts; Auditor; Management
and Financial Audits; Appropriation
Description:
Requires
the State Auditor to conduct management and financial audits of Medicaid health
care insurance contractors at least once every two years, with the first audit
report to be submitted no later than twenty days prior to the Regular Session
of 2027.
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Appropriates funds.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.